Exceptional Measures of Damages in Contract
The recent Law Commission Consultation Paper on Aggravated, Exemplary and Restitutionary Damages2 raises inter alia the question whether any of these three measures is appropriate in contract actions which do not also involve a tort. As far as contract is concerned, the Law Commission's provisional recommendation is one of no change. Aggravated damages should be abolished anyway by means of the removal of an exceptional conduct requirement and a strict compensatory model should apply.3 Exemplary damages should not be available for mere breach of contract.4 Restitutionary awards should be confined, as the Paper argues they are at present, to cases of contracts between fiduciaries and contracts which are specifically enforceable.5
At the end of the day I do not want to challenge these provisional recommendations, save perhaps for a qualification in relation to contracts which are specifically enforceable. But in order assess possible roles for aggravated, exemplary or restitutionary damages we need to consider the adequacy of the normal damage measures applied in contract cases. In particular, it has been argued that a restitutionary measure should be applied when the normal compensatory measure would pose a significant risk of uncompensated loss.6 This should prompt us to look first at the possible measures of compensatory damages.
Others have noted that English law awards damages for breach of contract in a very standardised way.7 The question I want to address in this paper is the extent to which the law does, or should, depart from what we may call the 'standard' measure of compensation in cases of breach of contract. In most situations the argument is about whether the plaintiff can or should be able to recover on some more generous level, though____________________